Morgan v. International Aviation Underwriters, Inc.

• Decision Date: 18 April 1967
• Citation: 250 Cal.App.2d 176,58 Cal.Rptr. 164
• Court: California Court of Appeals Court of Appeals
• Parties: John A. MORGAN, Plaintiff and Appellant, v. INTERNATIONAL AVIATION UNDERWRITERS, INC., a corporation, Defendant and Respondent. Civ. 30470.

Page 164

58 Cal.Rptr. 164

250 Cal.App.2d 176

John A. MORGAN, Plaintiff and Appellant, v. INTERNATIONAL AVIATION UNDERWRITERS, INC., a corporation, Defendant and Respondent.

Civ. 30470.

Court of Appeal, Second District, Division 2, California.

April 18, 1967.

E. W. Sheridan, Long Beach, for plaintiff and appellant.

Bolton, Groff & Dunne and John P. Daniels, Los Angeles, for defendant and respondent.

HERNDON, Associate Justice.

Plaintiff appeals from the judgment entered in favor of defendant insurance company following the presentation of plaintiff's evidence. (Code Civ.Proc. § 631.8.)

Both parties agree that said judgment rests entirely upon the trial court's determination that this action to recover indemnity for property damage sustained as a result of the accidental destruction of plaintiff's insured airplane is barred by a provision of the insurance policy which limits the time within which an action may be brought thereon to a period of one year following the date of loss.

Plaintiff's amended complaint acknowledges the undisputed fact that the action was filed on November 27, 1962, after the expiration of the one-year period but alleges that 'said period of limitations has been waived by the parties hereto' and further that by reason of its actions in the premises 'the defendant is now estopped from asserting (this provision of its policy) as a defense herein.'

By way of assignment of error appellant contends that the trial court erred (1) in failing to make any finding upon the issue of estoppel; and (2) that in the face of the undisputed evidence it may not be presumed that an 'implied' finding against appellant was made on this issue. We hold that both of these contentions are meritorious.

As previously indicated, since respondent's motion for judgment under Code of Civil Procedure, section 631.8, was granted, the evidence bearing upon the determinative issues is without conflict. It establishes that appellant purchased from respondent an Aviation Hull and Liability Policy that extended him both liability and property damage coverage for his Piper Apache airplane from April 3, 1961 to April 3, 1962. The policy further provided that in addition to being used for appellant's 'Pleasure and Business' the aircraft might be used on 'lease to James Naylor for Charter and Dual Multi Engine Instruction.' Finally, the policy provided: 'When in flight, the aircraft will be piloted only by (appellant and) * * * A. With respect to Charter Use: Any properly certificated commercial pilot having a multiengine rating and a minimum of 1000 hours as pilot in command of which at least 200 hours were in multi-engine aircraft and 10 hours were in model insured hereunder.'

On April 5, 1961, while respondent's policy was in full force and effect the aircraft was totally demolished in an accident in Albuquerque, New Mexico. At the time it was being piloted by James Naylor, who was transporting a disabled man, Mr. James Smith, his wife, and a nurse, Dorothy Shaw, to a point in Kansas. As will be more fully discussed hereafter, extended negotiations were thereafter conducted between the parties in an endeavor to reach an amicable settlement of the disputed issue as to respondent's duty to defend and indemnify appellant for the personal injury claims of the Smiths and Miss Shaw.

Ultimately respondent, while not conceding its duty so to do, did settle the claims of the Smiths and as late as January 15, 1964, successfully defended appellant in the action brought against him by Miss Shaw. Appellant testified that during his negotiations with respondent concerning the disputed personal injury coverage, respondent's agents had led him to believe that it was unnecessary for him to divide his claim and file a separate action against respondent within the one-year period in order to enforce his then unquestioned right to receive compensation for the property damage resulting from the destruction of his airplane. It is clear that the one-year limitation provision of the policy applied only to a claim for property damage.

In view of the evidence introduced, a determination of the merits of respondent's defense of the bar of the contractual limitation necessarily required the decision of two separate and distinct issues of fact: (1) whether respondent intentionally had Waived its right to rely upon and enforce the one-year limitation; and (2) whether respondent was Estopped to rely upon and enforce said limitation.

It is elementary and well settled that waiver and estoppel are two distinct and different doctrines. Both are of equitable origin and both are frequently invoked to rescue justice in situations where the party seeking to take refuge behind the bar of a statute of limitations, or a contractual limitation of the same nature, has conducted himself in such a manner that to apply the bar in his favor would shock the conscience of equity. (Cf. Smith v. Anglo-California Trust Co., 205 Cal. 496, 271 P. 898.)

The distinctness of the two doctrines and the very substantial difference in the ingredients or elements essential to their application are sufficiently demonstrated by their definitions. As stated in Altman v. McCollum, 107 Cal.App.2d Supp. 847, 861--862, 236 P.2d 914, 922:

'Although waiver and equitable estoppel are not always distinguished in the cases, they rest upon different legal principles. There may be an equitable estoppel where there is no waiver in the technical sense. Waiver is a voluntary relinquishment, expressly or impliedly, of a known right and depends upon the intention of one party only. Equitable estoppel is based upon the fundamental principle that 'one's conduct has induced another to take such a position that he will be injured if the first is permitted to repudiate his acts.' Bastanchury v. Times Mirror Co., 68 Cal.App.2d 217, 240, 156 P.2d 488, 500.' (See also 51 Cal.Jur.2d, pp. 306--307.)

The fact that appellant expressly requested findings in this case serves only to make it crystal clear that he was not waiving his right to a legally sufficient finding upon each and every issue of fact necessarily involved in deciding whether or not his action was barred. The decision in Lagomarsino v. San Jose etc. Title Ins. Co., 178 Cal.App.2d 455, 3 Cal.Rptr. 80, is very much in point. In an opinion by Justice Tobriner, the court reversed a judgment in a situation very similar to that involved in the case at bench. The court there stated at pages 461--462, 3 Cal.Rptr. at page 84:

'The courts have recognized estoppels in circumstances comparable to these. Thus the District Court of Appeal in Gaglione v. Coolidge, 1955, 134 Cal.App.2d 518, 286 P.2d 568, expressed the opinion: 'It is well settled that where delay in commencing an action is induced by the conduct of the defendant, he cannot avail himself of the defense of the statute. Adams v. California Mut. Bldg. & Loan Ass'n, 18 Cal.2d 487, 116 P.2d 75; Langdon v. Langdon, 47 Cal.App.2d 28, 117 P.2d 371; Berkey v. Halm, 101 Cal.App.2d 62, 224 P.2d 885; Schaefer v. Kerber, 105 Cal.App.2d 645, 234 P.2d 109. In Industrial Indem. Co. v. Industrial Acc. Com., 115 Cal.App.2d 684, 690, 252 P.2d 649, 652, it is said that 'Acts or conduct which wrongfully induce a party to believe an amicable adjustment of his claim will be made, may create an estoppel against pleading the statute. (Citations.) An insurer cannot hold out a hope of amicable adjustment of a claim and thus delay action against it, and then plead the delay caused by its own conduct as a defense to an action when brought.'' (134 Cal.App.2d at page 527, 286 P.2d at page 574.) Bollinger v. National Fire Ins. Co., 1944, 25 Cal.2d 399, 154 P.2d 399, applies an estoppel to an insurance situation, saying the statute may be suspended by 'fraudulent concealment by the defendant of the facts upon which a cause of action is based * * * or mistake as to the facts constituting the cause of action * * *. (E)quitable considerations * * * are applicable whether defendant violated a legal duty in failing to disclose its intention to set up this technical defense, or whether it is now merely seeking the aid of a court in sustaining a plea that would enable it to obtain an unconscionable advantage and enforce a forfeiture.' (25 Cal.2d at page 411, 154 P.2d at page 406.)

'The court made no finding upon the matter of estoppel. Yet a failure to find upon a material fact constitutes reversible error (James v. Haley, 1931, 212 Cal. 142, 147, 297 P. 920); the facts found by the court must be stated (Code Civ.Proc. § 632; People v. Ocean Shore R. Inc., 1937, 22 Cal.App.2d 657, 660, 72 P.2d 167). On the other hand, 'a judgment will not be set aside on appeal because of a failure to make an express finding upon an issue if a finding thereon, consistent with the judgment, results by Necessary implication from the express findings which are made.' (Emphasis added.) Richter v. Walker, 1951, 36 Cal.2d 634, 640, 226 P.2d 593, 596; italics added, To the same effect: Logan v. Forster, 1952, 114 Cal.App.2d 587, 602, 250 P.2d 730.

'Neither by expression nor implication do the findings state the court's position as to the possible estoppel. * * *'

Likewise in the case at bench the trial court's findings of fact contain no findings on the issues of estoppel and waiver. In its effort to sustain the judgment in the face of this omission, respondent argues that although no 'findings', as such, were made on either of these issues, nevertheless the following language found in the trial court's 'Conclusions of Law' should be deemed a sufficient factual finding on Both of these crucial issues:

'That at no time from the date of loss until the filing of (this) action did the (respondent) company by and through its agents, representatives, employees or legal representatives Waive any of the terms or conditions of the aforementioned policy, and in particular, Waive the condition that any action upon the policy shall be commenced...